KUSI's McKinnon Still Interested in Union-Tribune Purchase, but Industry Turmoil Slows Any Deal

Michael McKinnon, whose McKinnon Broadcasting owns 82.5 percent of KUSI-TV, is still interested in putting together a group of buyers for the U-T, I have learned from a reliable source. Last summer, not long after the paper went on the block in July, he expressed interest in putting together a group of local investors to buy the publication and combine the new organization with KUSI's. He is said to believe that is still a viable model. However, the collapse of the daily newspaper industry -- the recent wave of bankruptcies and shutterings -- casts a pall over any deal. Any deal is unlikely soon, McKinnon is said to believe. He is said to feel there will have to be more cost trimmings. Also, an out-of-town buyer may be out of the question in the current turmoil. I have heard from another source that the U-T may suffer negative cash flow now, although it might have been slightly positive several months ago. The La Jolla properties may not be part of any pending deal. The Mission Valley property by itself may be worth $50 million, according to a real estate source of mine, but if the real estate were handled through a lease arrangement, the cost of the paper would probably be under $50 million.

Response to post #1: Traditionally, "canceled" and "cancelled" are both acceptable. That aside, I noticed the story. Things are really rough in the daily newspaper industry, and it appears they will get rougher. Best, Don bauder

It seems to me that one of your sources is an old friend inside the UT. That person should be ashamed of themselves, and you should be ashamed of yourself. The UT is still home to 1,000 people who work hard to create a nice product every day and who depend on their jobs to feed their families. You may think you are huring Copley and Bell with your posts, but you are merely hurting the people who matter.

Response to post #4: I have numerous sources on the subject of the U-T, both inside and outside the company. My purpose is to inform people of what is going on. That should be valuable for the people who still work for the company, rather than hurting them. Employees tell me they get more information from this blog than they get from management. Best, Don Bauder

Response to post #7: McKinnon has always intended to bring in other investors. The question is how much the U-T is worth. In today's environment, it's no doubt worth far less than it was in August, when he first expressed interest. I'll be having some more on the value of daily newspapers. Best, Don Bauder

Re #6: Keep up the insightful work, Don. Those of us who escaped the UT are among the many people still interested in the various (or shall I say nefarious) goings-on there -- as are the majority of the current employees I know.

Response to post #9: Posted above is another entry on the stock market's valuations of newspaper chains, along with the enterprise value, or what it would take to purchase a publicly-held paper chain. There are a number of variables I don't get into, of course, but as the collapse of the daily newspapers continues, the values are falling precipitously. As I mentioned earlier, some of these newspaper stocks are down 95 percent or more in the last year. Investors don't think dailies have a future. Of course, the market is often wrong, too. We'll see. When I retired in 2003, I took the lump sum instead of the annuity. The overwhelming reason was that we wanted to pass the money on to our sons eventually. However, I also had qualms about the newspaper industry as well as the U-T. I caught holy hell at the U-T for saying back in the 1980s that demographics dictated a sharp decline in newspaper readership. But it came faster than I thought it would. Best, Don Bauder

My sense of it is that the newspaper industry will be around, but needs to reinvent itself. Consider the precedent of the cruise ship industry. When commercial transoceanic air travel materialized, the cruise ship seemed to some to be doomed. But the industry rebounded; the ships are bigger and more ostentatious than those that ferried the robber barons a century ago. And, ironically, airplanes carry people to and from ports of embarkation.